Dalian iron ore extends losses to 6-mth low as glut worries persist

Reuters Staff

3 Min Read

* Shanghai rebar down nearly 3 pct

* Coking coal, coke also slide again

By Manolo Serapio Jr

MANILA, June 1 (Reuters) - Chinese iron ore futures fell more than 3 percent to a six-month low on Thursday, adding to a 6-percent slide in the previous session amid persistent concern over surplus supply that has pushed the market well into bear market territory this year.

Spot iron ore prices have dropped 40 percent from this year’s peak, closing out May at about $57 a tonne, the weakest in more than seven months.

“Oversupply concerns were driven by strong seaborne supply and subdued restocking demand” after China’s public holidays, Commonwealth Bank of Australia analyst Vivek Dhar said in a note.

Chinese markets reopened on Wednesday after public holidays on Monday and Tuesday.

The most-active iron ore contract on the Dalian Commodity Exchange was down 3.7 percent at 422.50 yuan ($62) a tonne by 0216 GMT. The steelmaking commodity earlier hit 419.50, its lowest since November 2016.

“Availability is not an issue, so fundamentally that is the problem,” said Kelly Teoh, broker at Clarksons Platou Futures.

“Also we’re coming towards the summer where construction is going to pace down and globally when you look at things, we’re not as robust as we were.”

Steel consumption in China, the world’s biggest consumer and producer, typically eases during summer along with construction activity.

Iron ore for delivery to China’s Qingdao port .IO62-CNO=MB slid 2.5 percent to $57.02 a tonne on Wednesday, the lowest since mid-October, according to Metal Bulletin.

The spot benchmark lost 17 percent in May, its steepest monthly decline in a year.

Steelmaking coal also extended losses. Coking coal on the Dalian exchange was last down 5 percent at 941.50 yuan a tonne, after falling as far as 935.50 yuan, its lowest since October. It dropped by the exchange-set limit of 9 percent on Wednesday.